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Your CIBIL score reflects your creditworthiness
A score of 750+ will get you quick approval on a home loan
Scores below 650 need improvement
Boost your score by paying existing bills and EMIs on time
Lenders prefer that a customer’s CIBIL score for a home loan be around 700, if not 750 and above. This is because CIBIL scores serve as a simple metric by which lenders can gauge a customer’s repayment capabilities. Home loans typically offer you ample financing, to the tune of lakhs and going up to a few crores, and for a lengthy tenor. To keep defaults at bay, lenders make every effort to know whether you will be able to pay back the finances borrowed diligently over the tenor. Hence, when applying you may frequently hear about ‘minimum CIBIL score for home loan’, ‘CIBIL score range for a home loan’ and may even see a lender doing a CIBIL score check before getting to the paperwork.
To be well prepared for your home loan application and boost your chances of getting a home loan easily, learn what a CIBIL score is, how it affects your loan and how you can improve it.
CIBIL score is essentially a credit score offered by the Credit Bureau TransUnion CIBIL. Along with Equifax, Experian and Highmark, CIBIL or Credit Information Bureau (India) Limited is one of the 4 credit bureaus authorised by the RBI to keep a credit record of every Indian citizen. In India, a CIBIL score carries a phenomenal weightage as a majority of the financial institutions here have ties with the bureau. As such, your lender is likely give preference to a CIBIL score over other valid credit scores.
Your CIBIL score, in simple terms, is a 3-digit figure ranging between 300 and 900. CIBIL evaluates your repayment history, credit handling tendencies, and existing finances to arrive at a justified score.
Whether from CIBIL or another issuing body, most credit scores range between 300 and 900. A score of 900 is the highest score achievable. Having a score of 750 and above implies that you have an ideal credit score for a home loan. It lets you get a loan easily and gives you negotiating power. This means you can access a competitive home loan interest rate and even get the ample home finance.
A score ranging between 650 and 749 is considered good and lenders may offer you a home loan after inquiring into your other financial details. However, lenders usually consider 650 as the minimum CIBIL score required for a home loan. Scores ranging between 550 and 649 are average and require working on. Bad scores are the ones that fall in the 300 to 549 bracket. Finally, NH or NA implies that you do not yet have any credit history.
You can check your CIBIL score online via CIBIL’s official website, once a year for free, or multiple times a year at a fee. Follow these steps:
Click on the orange button - ‘get your CIBIL score’- placed at the top-right corner.
Select a subscription plan.
Enter details like your date of birth, mobile number and email address.
Create a password that you will use when logging in later.
Select your ID type and enter your ID details.
Proceed to ‘verify your identity’ and answer all questions accurately.
Complete the process at the ‘make payment tab’.
If you need just 1 CIBIL score per year, skip the subscription plans and proceed to your account.
Login by authenticating yourself via email or OTP.
Enter details in the form that appears.
Upon submitting, your CIBIL score will be displayed on the dashboard.
The best CIBIL score for a home loan is 750 and more. That said a score of 700 and above is still good and should suffice for most lenders. However, the actual figure is lender-specific. A higher CIBIL score translates to a swifter loan approval, and on more affordable terms. So, in terms of the upper limit, it’s always desirable to have a higher CIBIL score.
Additional Read: How to Improve Credit Score for Home Loan?
What Should Be Your CIBIL Score to Apply a Home Loan
The minimum CIBIL score for a home loan in India varies across lenders. For one, the cut-off may be 700 and for another 650. Since scores ranging between 650 and 749 are classified as ‘good’ and scores of 750 and above as ‘excellent’, you better your chances by having a higher CIBIL score.
Yes. Like other lenders, Bajaj Finserv also checks your CIBIL score before giving the green signal on a home loan or a home loan balance transfer application. The Bajaj Finserv Home Loan offers you high-value financing, up to Rs.3.5 crore, at one of the lowest interest rates in the country. You can repay your loan via a tenor of up to 20 months and make prepayments and foreclose your loan at no additional charge. Since it is an economical solution, you may want to transfer your existing home loan to Bajaj Finserv. You can do so quickly and with minimal documentation.
As a general rule, the minimum score for a Home Loan is 750. The minimum score for a balance transfer can be slightly lower and depends on internal policies and other factors.
Yes. If you have a good CIBIL score for a home loan, eligibility terms become simpler and your application gets approved quickly. Lower scores imply risk, and lenders may have to tweak the loan offering accordingly. For example, a loan offered for a credit score of around 600 may imply that you have to settle for a lower principal amount, say up to only 40% of your asset’s value. Similarly, it may be very difficult to get a home loan without a credit score and lenders will have to look into other personal finance factors in detail before approving such an application.
You can get a home loan with a low CIBIL score, but it is difficult. Since lenders may be stringent with the minimum CIBIL score for a home loan requirement, be prepared with a backup plan when asking your financier: ‘My CIBIL score is 550, can I get home loan?’ Consider including a creditworthy guarantor or co-applicant when applying for a home loan on a low credit score to boost your prospects of getting a quick and cost-effective sanction.
The term CIBIL defaulter is actually a misnomer and the question can be better understood as: ‘Can a person who has defaulted on loans or EMIs and thereby has a low CIBIL score get a home loan?’ The answer is yes, but with difficulty. Since defaults indicate a lapse in your faithfulness to debt repayment, it can be tough to get a home loan. However, there are some measures that you can take. For instance, you can improve your score by paying all present EMIs diligently, boost your income, and consider including a guarantor or apply for a joint home loan with someone who has a high credit score.
Read Also: How does a Joint Loan affect the Credit Score?
Here are a few standout benefits of having a good CIBIL score:
Get more negotiating power
Obtain a home loan at a nominal interest rate
Avail a higher home loan sanction
Benefit from speedy loan processing
At times, stalling your application and improving your CIBIL score is the best way to get an affordable home loan. Here are some ways by which you can build your credit score.
Pay existing loan EMIs on time.
Pay your credit card bills within the due date, in full.
Monitor your credit report and rectify mistakes by intimating the credit bureau.
Keep your credit utilisation around or below 30%
While a CIBIL score proves your financial mettle, being able to service a loan hinges on another parameter as well such as your debt-to-income ratio. To get a home loan that matches both your CIBIL score and your debt-to-income ratio, use a home loan eligibility calculator or simply check your pre-approved offer from Bajaj Finserv before applying and avail home financing on personalised terms. Single-step verification here gives you instant approval through a customised home loan deal.
Additional Read: How Credit Score can Determine your Home Loan EMIs?
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